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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. The captioned appeals filed by the Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai [in short ‘CIT(A)’] and arise out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).
Though, the case was fixed for hearing on 10.03.2021, neither the assessee nor his authorized representative appeared before the Bench on the above date. As there is non-compliance by the assessee, we are proceeding to 2 & 5331/Mum/2019 Shri Dhanpat C.Munot dispose off these appeals after examining the materials available on record and after hearing the Ld. Departmental Representative (DR). Facts being identical, we begin with the AY 2009-10.
Briefly stated, the facts of the case are that the assessee filed his return of income for the AY 2009-10 on 29.09.2010 declaring total income of Rs.8,38,,010/-. On receipt of information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills amounting to Rs.54,36,930/- from Rajratan Metal Industries, and Rs.66,12,893/- from Swastik Impex, the Assessing Officer (AO) issued notice u/s. 148 for reopening the assessment. In response to it, the assessee filed a letter before the AO along copy of return for the above AY. During the course of reassessment proceedings, the AO issued notice u/s 133(6) to Rajratan Metal Industries and Swastik Impex to verify the genuineness of the purchases. However, those notices were returned un-served by the Postal authorities with the remark “left”, “not traceable”, “not known” etc. Thereafter, the AO asked the assessee to produce the above parties before him for examination so that the genuineness of the transaction could be verified. However, the assessee failed to do so. Considering the facts of the case, the AO estimated the profit @ 12.5% of the disputed purchases of Rs.1,20,49,823/- and accordingly made an addition of Rs.15,06,228 /- on account of non-genuine purchases.
In appeal, the Ld.CIT(A) vide order dated 28.05.2019 held that “5.5 From the aforesaid cited decision of Gujarat High Court in the case of Simit P Sheth (supra), it can be observed that the appropriate GP percentage for computing the unaccounted profits from the purchases from the alleged hawala/bogus suppliers should factor the savings of taxes etc due to the unaccounted sales and the 3 & 5331/Mum/2019 Shri Dhanpat C.Munot GP already shown in the regular books. It is observed that the ratio of the decision of the Gujarat High Court in the case of Simit P Sheth (supra) cannot be squarely applied to the facts of the case of our assessee since the sales tax rate prevalent in Gujarat was 10% as against only 4% applicable in Maharashtra for the relevant period. However, the facts of the case of the assessee are some-what similar to that of Ratnagiri Steels (supra). In the case of Ratnagiri Steels(supra), the Hon'ble ITAT Mumbai directed the AO to allow set off of the book GP against the said rate of 12.5% while computing the additional profits from the purchases from the alleged hawala/bogus suppliers. It will therefore be appropriate if rate of 12.5% is applied for computing the unaccounted profits related to purchases from the hawala/bogus suppliers and against this set off of the GP shown in the regular books in respect of the purchases from the hawala/bogus suppliers is allowed. Accordingly, the AO is directed to compute the additional profits in respect of the purchases from the alleged hawala/bogus suppliers by adopting rate of 12.5%. However, the AO will allow a set off of the GP already shown by the assessee in the regular books in respect of the purchases from .the said alleged hawala/bogus suppliers”.
Before us, the Ld. DR supports the order passed by the AO.
We have heard the Ld. DR and perused the relevant materials available on record. In the instant case, the Ld.CIT(A) rightly observed that the case of Simith P.Sheth (supra) cannot be squarely applied for the reason that the sale tax rate prevalent in Gujarat was 10% as against 4% applicable in Maharashtra for the relevant period. Further, we find that the Ld.CIT(A) has rightly followed the order of the Tribunal in the case of Ratnagiri Steels (supra) and directed the AO to allow set-off of the book GP against the said rate of 12.5% while computing the additional profit from the purchases made from the alleged hawala/bogus suppliers. His direction to the AO to compute the additional profit in respect of the purchases from the alleged hawala/bogus suppliers by adopting 12.5% and to allow a set-off of the GP already shown by the assessee in the regular books of accounts in respect of the purchases from the said alleged hawala/bogus suppliers, is a reasonable one. We affirm, the order of the Ld.CIT(A).
Facts being identical, our decision for the AY 2009-10 applies mutatis mutandis to AY 2010-11.
In the result, the appeals filed by the revenue are dismissed. Order pronounced in the open Court on 12/03/2021